Air China, Shanghai Airlines deny equity tie-up

After admitting that advanced talks on further cooperation between Air China<601111><753> and Shanghai Airlines<600591>, executives from both sides denied the rumor of forming an equity tie-up, sources reported.

"We (Air China and Shanghai Airlines) are expanding wide-range of cooperations as both of us are Star Alliance members, but we have no plan for such an equity tie-up." said Huang Bin, Air China's board secretary.

A Chinese media cited one executive from Air China earlier as saying that the two air carrier are considering cooperation on equity, which has greatly boosted their share prices.

However, analysts say it is not possible for any big M&A move in the aviation industry this year as the Beijing Olympics and the direct Mainland-Taiwan fight are currently the most important things.

Currently, Air China has a 12% market share in Shanghai, and it has been striving to expand its operations in the core aviation hub in China.

Shanghai Airlines and Air China's shares surged 10% and 9.59% on Tuesday to close at RMB 10.24 and RMB 17.83 respectively.